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Chapter Five
Industry Analysis
Dr. Bruce BarringerUniversity of Central Florida
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Introduction
Industry
A group of firms producing a similar product or service
Industries vary by Size Growth-rate structure Financial characteristics Attractiveness
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Target Market
Target Market
The limited portion of an industry that it goes after or tries to appeal to at a certain point in time
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Industry
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Industry Definition
Define the firm’s industry
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Industry Size, Growth Rate, and Sales Projections
Display financial information in a multiyear format
Display your information graphically
Produce information on your industry on a regional or local basis
Report both positive and negative information on your industry
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Size
Displayed in dollars over a 3- to 5- year period
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Growth
Should be reported on a percentage basis with an interpretation of what the numbers mean
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Industry Sales Projections
Report future sales projections for your industry
Include concrete numbers of anticipated sales and growth rates
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Industry Characteristics
Industry structure Nature of the
participants in an industry
Key ratios Key success factors
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Industry Structure
Concentrated or fragmented Concentrated industries are dominated
by a few large firms Fragmented industries include a large
number of smaller companies General attractiveness
A structurally attractive industry has high barriers to entry, no good substitutes for the product, limited power of supplier, and limited power of buyers
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General Attractiveness
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Ratio
Report an industry’s key financial ratios and other ratios of interest
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Key Success Factors
Examples Brand name recognition Access to distribution
channels Quality of products Ease of use Price Marketing support Quality of customer service
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Industry Trends
Environmental trends
Business trends
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Environmental Trends Economic trends
Social trendsTechnological advances
Political and regulatory change
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Business Trends Profit margins Innovation Input costs
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Long-term Prospects
Include a brief statement of beliefs regarding long-term prospects for the industry
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